Communications Pacific is gutting its advertising division and plans to partner with another local ad firm to provide creative and media services.

Company President and CEO Kitty Lagareta blamed the change on the economy of the last 18 months, saying that while the firm’s public relations and community building divisions were seeing an uptick in business, advertising has lagged behind.

“We’re not getting out of it, we’re doing it differently,” Lagareta said.

The change means four employees, one of whom was on leave, will lose their jobs, Lagareta said. Five other employees will remain, working in account service strategy, she said.

“We’re going to do marketing service, we’ll do account service, planning and strategy,” Lagareta said. “We’re going to be working with a partner very closely to do the creative and implementation.”

Lagareta declined to identify the prospective partner, only to say that it was a local firm, and said she expected to have an announcement about the partnership next month.

According to PBN research, Communications Pacific was the fifth-largest advertising agency in Hawaii last year. It had a total of 43 employees among all its divisions. The firm also had 18 clients in 2008, with billings that year of $14.26 million.

Lagareta described the client list as of this year as “a handful,” and said it still included such major clients as Mobi PCS, Hawaii Medical Assurance Association and First Insurance Co. of Hawaii Ltd.

A spokeswoman for Mobi PCS said the wireless telephone company had notified Communications Pacific that it would not be renewing its advertising contract when it expires on July 30.

“Mobi is actually talking to a number of different companies, so we’re moving away from working with one traditional advertising agency and instead talking with a number of different companies to provide slightly different services than what we would have gotten from a traditional advertising agency,” spokeswoman Deborah Sharkey told PBN.

Communications Pacific started its advertising division in 2004 at the request of some of the 41-year-old firm’s public relations clients

“It was great for about four years,” Lagareta said. “It’s been much more challenging the last 18 months or so.”

The global economic downturn hit the advertising industry hard both nationally and here in Hawaii.

Communications Pacific had laid off five employees from the advertising staff in the fall of 2008, and Lagareta said at the time that clients were being very tight with their advertising dollars.

The company’s public relations and community building divisions have been seeing growth over the past six months, while the in-house advertising division has remained volatile, she said.

“I honestly see the age of partnerships, working together, not necessarily having everything in one shop,” she said. “For us it’s just kind of an evolution that makes sense in the environment we’re in.”